I've been sceptical about the valuation of Judges shares for a while, and on 24 Jan 2014 my conclusion here was, "it's been an amazing ride for shareholders, but with growth now much harder to bolt on, due to the enlarged size of the group, and a very rich valuation, if it was me, I would say thank you very much indeed, bank my profits, and move on. Each to their own of course!". So I hope readers did bank some profits.

This is one of many highly-rated (in PER terms) shares that has been under pressure since the high point of the small cap market in Mar 2014. As you can see from the chart below, it peaked several times at around 2375p in Feb-Mar this year, before lurching down to just over the 2000p level in late Apr 2014.

There were no trading updates or accounts published at that time, so it was unclear what triggered the fall, other than the general sell-off in small caps - the FTSE Intl-aim All Share Index (FTSE:AXX) has dropped 14% from its peak in the spring, so most small caps have been under selling pressure since then, some considerably - especially the more speculative and highly rated stuff.

Further recent falls have reached a crescendo today in a savage move down this morning on publication of a profit warning. As profit warnings go, it's not a disaster, and WH Ireland has this morning lowered its EPS forecast for this year from about 96p to 86p.

In my opinion it's starting to look interesting at the current price, so I picked up a small slice of shares bang on the low point this morning at 1240p, which was a stroke of luck, as it's bounced quite well so far, so I chopped them out again at 1390p. Who said never catch a falling knife?! I remain of the view that profit warnings are currently one of the few times you (selectively) get a chance to buy quality companies at a bargain price.

Also there is often a short term trading opportunity early on, as stop losses are triggered with the spread betters, and stock is dumped at any price, before the punters liquidate other positions to free up margin to buy back in again. Get the timing right, and there are nice gains to be made, with care. Time it wrong, or back a dog, and you take a nasty loss of course!

Personally I like doing a little trading on the side, to keep me busy amp; have some fun whilst waiting a few years for my long term positions to come good, which a majority usually do (some go wrong along the way too, inevitably). There's no conflict at all between having a long term buy amp; hold portfolio, and a short term trading account too in my opinion - providing that you view them as two separate activities. In my view doing some short term trades also keeps you tuned in to market sentiment, which can help time buy amp; sell decisions better on the long term portfolio, as well as generating a bit of lunch money along the way.

H1 trading (6m to 30 Jun 2014) is described as "challenging" by Judges. Organic growth was still 3.2% though. A big acquisition boosted the headline revenue figure by 43%.So that in itself isn't too bad, but it's the order intake that is the worry. It was 11% below the level necessary to meet their full year sales target. At 30 Jun 2014 the order book was 7.8 weeks of sales, a sharp reduction on 10.6 weeks a year previously. That suggests to me that another profit warning for H2 could be in the pipeline possibly?

Two specific factors are mentioned;

The efforts to contain public sector spending have been compounded by the 10% appreciation of Sterling against the US$ during the last twelve months. The US$ remains the benchmark of value outside Europe, where we export half of our turnover.

In fairness to Judges, they did mention the strength of sterling as a headwind in January, as I reported at the time, so it just shows that these cautionary sentences in trading statements can be the seeds of a profit warning a few months down the line, so should be taken heed of.

This stock deserves a premium price due to the track record of management in making a series of superb acquisitions. I feel it has now come down to a more sensible price, but wouldn't be at all surprised to read another profit warning in a few more months' time. So I'll sit amp; watch from the sidelines for the time being. Depending on how the company trades, in my opinion £10-15 per share is probably about the right share price range.

I like the trading update from this marketing company today. The summary of today's announcement says;

Cello has experienced robust trading for the first six months to 30 June 2014. Like-for-like gross profit growth (which excludes the impact of acquisitions) has been in excess of 10% for the period. The Group has increased its investment in professional resource to service this high level of gross profit growth. Despite this increased investment overall Group operating margins have also grown slightly in the period.

The Board is therefore pleased to announce that trading for the first six months of 2014 will be well ahead of the same period in 2013 and that it expects to at least meet current full year market expectations.

I like that phrase "at least meet" - so it's now a question of by how much they out-perform.

Note that broker consensus has been creeping up in the last 12 months, usually a good sign. So maybe they are now heading for say 8-9p EPS this year? Who knows, that's just a guesstimate.

In valuation terms, at the current share price of 93p that means a reasonably attractive PER in the low teens.

There's a reasonable divi yield of just under 3% too.

My concerns are Balance Sheet weakness, as covered in more detail in previous reports. Net tangible assets are negative here, by £6.9m when last reported. However if you can live with a weak Balance Sheet, then it seems to be a company that is trading well, at a reasonable valuation. DYOR as usual, this is just my opinion based on a fairly cursory review of the numbers.

I'm not usually interested in companies which supply food to supermarkets, as they are constantly squeezed on margins. I last looked at Finsbury Foods 10 months ago here, noting that the Balance Sheet was much improved (but still not particularly good), the existence of a pension deficit, and decided that I wasn't interested at 73p per share.

The Board expects to report full year profit ahead of market expectations.

Turnover is roughly flat against last year, and various other detail is given, including how capex of £6m in the year has improved competitiveness and provided new capacity. So it sounds like this bakery company is on a roll (geddit?!!).

The total divis for the year have been raised to 1p (up from 0.75p), so the yield is still modest at nearly 1.7%, based on the current share price of 60p.

The forward PER looks attractively low at just 7.5, based on the Stockopedia figures, although that's based on trailing twelve month figures. Digging around for forecasts, I've come across a 6.3p EPS forecast from Cenkos for the relevant year that has just finished. So as they are ahead of that, I suppose we might be looking at (say) 7p EPS? That would put it on a PER of around 8.6, which looks reasonable.

There's possibly more upside on the share price from this point, so it might be worth readers taking a look at it amp; doing some more research perhaps? It's not really my thing, so I'll move on.

Good figures have been reported this morning from this luxury furnishing amp; fabrics group. Checking the archive, I've only reported on it once here, in Jan 2013, so forgive me if I'm rusty! I thought they looked over-priced at 240p then, but they're now 350p, so I was wrong about that! Mind you, earnings have risen a lot in the last 18 months.

The results for y/e 30 Apr 2014 show turnover up 11% to £78m, and pre-tax profit up 38% to £4.9m. EPS is up an excellent 53% to 27.9p. The shares are currently 350p so that looks like a reasonable PER of 12.5. I'm starting to get interested, especially as it also had net cash of £4m at the year end. A further positive is that £4.25m was returned to shareholders through a tender offer, which shows a mindset of Directors who understand that it is their job to create shareholder value. Just over a million shares were bought in amp; cancelled at a price of 400p, reducing its share capital by 8.6%, with an obvious benefit to future EPS amp; DPS.

The shares are down sharply today, so there must be some bad news lurking. I've spotted two issues. Firstly is they sell from the UK into the USA, so that means the dreaded currency issue surfaces again - this is becoming a recurring theme with lots of companies I'm looking at, so investors need to think about this issue amp; how it affects companies you are invested in. Simplistically, strong sterling is likely to hurt UK exporters, and benefit UK importers.

The second issue is whether the good results for 2013/14 are repeatable, as apparently some projects finished in this year which were delayed from the previous year. So it looks to me as if broker consensus forecast of a further rise in EPS to 31.6p this year might be too optimistic? Personally I'd be comfortable assuming that EPS is more likely to drop this year, maybe to (say) 20-25p? At that level the shares don't look so attractive at 350p, as the PER would now be 14-17 or higher, which is probably high enough.

It does have a very nice Balance Sheet though, with current assets at a very healthy 215% of current liabilities.

Note that there is a tiny pension deficit of £117k, but that would need to be checked to ensure it's not a horrible tip of the iceberg one.

Note also that there's a chunky depreciation charge of £2.1m p.a., so the EV/EBITDA figure would look quite good here - i.e. it's nicely cash generative. Although capex has been similar to depreciation in the last two years combined, so it looks to need continuous capex spending.

The Chairman amp; CEO has an overly dominant shareholding of 32.9%, and combining those two roles is not best practice, and confirms the view that this is really a private company that happens to have a Listing.

Overall, this one is potentially interesting, but probably a bit too pricey for me at the moment (as I said last time!)

The share price of this small recruitment company has dropped sharply today due to the return of surplus cash to shareholders today. Good to see a company unlocking shareholder value in this way, rather than sitting on surplus cash as a comfort blanket. Good for them! The divi yield is quite good too. Might be worth a look?

All done for today. See you tomorrow morning as usual.

Regards, Paul.

(of the companies mentioned today, Paul has no long or short positions)